Congratulations to the government and M Kayveas for finally taking a strong stand on the current Ctos saga. While people condemn Ctos, everyone must understand and accept the fact that credit reporting agencies play an important role in assisting the relevant agencies in assessing the credit worthiness on an individual or a company. It is a false perception that credit reporting in Malaysia equals to Ctos. Ctos has been the target because it is the leading company on credit reporting in Malaysia.
Credit reporting has existed in the United States since 1970 and it has since developed into an integral part of the financial system. It has even been well accepted in developed economies such as United Kingdom, Australia many others. Strict regulations are already in place so that these agencies operate fairly. Laws like Fair Credit Reporting Act in the US, Consumer Credit Act in the UK, Privacy Act in Australia has been in place for a long time now.
The guiding principles within which any credit reporting should operate are privacy, accuracy and fairness. Credit reporting businesses in Malaysia has lacked all these very basic elements, therefore subjecting them to condemnation.
Currently the public has developed hatred toward Ctos specifically because the majority of them have had their names listed on its database and this has affected their financial credentials. These people would have in some point of time gone into trouble with their creditors. They must remember that by prosecuting Ctos, it does not mean that there will be no more credit reporting agencies in Malaysia. Their names might still appear but this time on a strictly regulated basis.
Currently while the government looks into regulating the operations of credit reporting agencies, it is vital that they also re-visit the consumer credit policies. If these policies are not re-assessed now, probably there would be another outcry against the operations of these would-be regulated credit reporting agencies in the near future.
Credit cards are issued easily to graduates and hefty interest rates are charged, car loans are approved without a 10 percent down payment and loans extended to nine years, easy payment schemes are easily available to purchase household items even though it is beyond the affordability of an individual, personal loans are easily issued by certain financial institutions and service memberships are purchased by individuals even if they can't afford it. All these has been the major contributor towards an individual's name appearing on a credit report list.
People must understand that credit reporting can operate both ways. To a consumer it can save him from further debts and for the financial institutions it could help them in assessing the credit worthiness of a person. Consumers must understand that spending beyond their means would be detrimental to them and it is important that the government tightens rules on consumer credit and continue to educate consumers on best financial practices.
The writer is director National Consumer Complaints Center (NCCC).
